Industrial Tool Orders Decline 42% in April

Orders for industrial tools fell 42% in April from the previous month, Assn. of Manufacturing Technology figures say.

In dollar terms, the decline is the largest decrease in orders ever recorded by the trade group.

Economists monitor machine tool orders and shipments to gauge industrial output, consumer demand and business investment.

Warmer spring weather typically brings an increase in orders during April, as buyers find it easier to travel to inspect potential purchases, said Charles Pollock, an AMT spokesman. This year, however, record-setting March orders might have subtracted from activity last month, he said.

“At our semiannual members’ meeting at the end of April, people weren’t talking about a downturn,” Pollock said. “Everybody still feels business is pretty good.”

Still, the report comes as recent government data suggests that the economy is slowing under the weight of seven Federal Reserve Board interest-rate increases aimed at preventing accelerated inflation.

Last week, Commerce Department figures showed that orders to factories for big-ticket goods during April posted the largest drop in more than three years. The report showed that orders for machinery and equipment, which helped fuel the 2.8% economic growth recorded for the first quarter, also fell last month.

That does not bode well for the industrial tool industry, which counts manufacturers of autos and heavy machinery among its biggest customers. “Continued declines in durable goods would change the outlook for our industry,” Pollock said.

In other signs of manufacturing weakness, U.S. industrial production fell for the second consecutive month in April, and manufacturers and construction companies laid off more workers than they hired last month. Housing construction is also ailing as builders attempt to sell a glut of new homes.

In April, machine tool orders plunged to $335.1 million after rising 52.1% to $577.5 million in March--the highest level on record. Previously, March orders were reported to have risen 47.3%. Compared to a year earlier, machine tool orders declined 19% last month.